A ‘mixed bag’ for clean energy as Midwest legislatures close out 2016

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J. Stephen Conn, Jim Bowen, tlarrow via Creative Commons

Lawmakers in three Midwest legislatures closed out their 2016 lame-duck sessions with plans to both expand as well as slow clean energy development. The proposals in Ohio, Michigan and Illinois came under three Republican governors and, aside from Illinois, Republican-held legislatures.

In each case, major utilities played significant roles — either prominently lobbying or behind the scenes — in getting policies adopted in their favor.

In Ohio, this meant a concerted effort toward what critics say further weakens the state’s renewable energy and efficiency standards. On Dec. 8, lawmakers sent a bill to Gov. John Kasich that makes those standards voluntary for the next two years. Advocates and others have since called on Kasich to veto the plan.

However, a different story played out in Illinois and Michigan, where clean energy was just part of broader statewide energy plans. In Illinois, Exelon pushed lawmakers for subsidies that would help keep open two uneconomic nuclear plants there at $2.4 billion over the next 10 years. Clean energy advocates supported the legislation, though, because it would update the state’s renewable energy standard in a way that will lead to more in-state solar and wind investment. In the past, Exelon had opposed such a measure out of fear that renewables would compete with its nuclear fleet.

In Michigan, major utilities DTE Energy and Consumers Energy supported a two-bill package that Gov. Rick Snyder is expected to sign that expands renewable and efficiency standards. But for the past two years, the state’s partially deregulated electricity market was in the crosshairs, with major utilities leading a push that critics said would have ended the state’s electric choice market. In the end, Michigan’s bills received widespread support from both sides of the electric choice debate as well as from clean energy groups.

“It’s plainly a mixed bag. Illinois and Michigan are stepping up to accelerate solar energy and wind power in ways that help build jobs, economic growth and environmental progress for the future,” said Howard Learner, executive director of the Environmental Law and Policy Center. “Unfortunately Ohio is taking a step back by reverting to voluntary standards and taking other actions that weaken energy efficiency in the state. … We hope Gov. Kasich will step up and show leadership and put Ohio on a much stronger path for clean energy development.”

Michigan

Similar to Illinois, the Michigan bills were sweeping proposals that tied together market regulation, Integrated Resource Planning rules, and the state’s clean energy standards that leveled off at the end of 2015. Given Michigan’s strongly held Republican legislature, key lawmakers initially indicated Michigan would move to voluntary clean energy goals.

As policy negotiations dragged on and Republicans were split over electric choice provisions, many Democrats and clean energy groups supported the bills because of the increased RPS to 15 percent and lifting spending caps on energy efficiency.

“I think the utilities obviously were the big winners in this,” Larry Ward, executive director of the Michigan Conservative Energy Forum, said of the Michigan bills. “If anything, they played it the best and had everyone in such a state of just wanting status quo right from the early negotiating positions on this.”

Key lawmakers steering energy policy in the state House and Senate expressed until this year a desire to end clean energy standards, saying the industry had come to mature since the mandates were passed in 2008. Those lawmakers also made it clear they wanted to bring more “fairness” to Michigan’s electric choice market, and some sought early on to move Michigan back to a fully regulated market.

The final provisions in SBs 437 and 438 were reportedly hashed out in negotiations with Snyder and the major utilities until 5:30 a.m. on the last day of session.

“They played it masterfully,” Ward said of the utilities. “We saw it from the beginning: Ask for the world and settle for something in between. At the end of the day, it’s good legislation. I like where Michigan landed on this thing.”

Brandon Hofmeister, vice president of governmental and public affairs for Consumers Energy, called the new choice provisions that seek to ensure reliability from all electric providers was a “good compromise, not a perfect compromise.”

He also said the company is “very supportive” of continued investments in renewables and efficiency.

“We didn’t necessarily weigh in directly on what exactly the mandate was going to be. We’re planning to build new renewables regardless and we certainly never were opposed to an achievable mandate,” Hofmeister said. “This is very achievable, it’s the right thing to do, customers want it and we want to do the right thing for the state of Michigan.”

While 15 percent renewables could be considered a relatively low floor going forward, Ward and other advocates are optimistic, both in the greater role energy efficiency will play as well as renewable development. One provision also creates a green pricing tariff designed specifically for ratepayers that want more renewable sources of energy, which could include major corporations.

Also, the state’s solar net metering program was largely left alone after months of proposals that could have implemented what critics called punitive charges to use the grid or restructure the way net metering ratepayers were compensated. The final bills call for state regulators to take a year to determine a proper tariff going forward that accounts for both costs and benefits of net metering users.

James Clift, policy director the Michigan Environmental Council, said major utilities “obviously played a huge role in the design of this legislation and I think they’ll play a huge role in how it gets implemented.”

That includes provisions that task the Michigan Public Service Commission to study performance-based regulations and place a greater emphasis on rate design “to make sure we truly reflect the cost of serving customers,” Clift said.

“I think we’ll learn more about how (utilities) make decisions. It’s really a critical time for the industry,” said Clift, whose organization called it an “important victory.”

Illinois

While Learner called Michigan’s legislation a more “diffuse package,” he said Illinois’ was targeted specifically at “modernizing” the state’s renewable energy standard, saving Exelon’s two nuclear plants, setting rate caps and taking more efficiency steps.

Learner said the changes in Illinois will lead to 2,700 megawatts of new solar development in the state.

“The challenge now is to take strong legislative progress in modernizing the renewable energy standard in Illinois and implement it through the rule-making process where the rubber hits the road,” he said.

Learner added that ELPC worked closely with Exelon on the final outcome of the bill. While “a number of parties had legislative asks, some crossed the finish line and some didn’t,” he said.

For example, Dynegy was unsuccessful in getting supports for two of its downstate coal plants, while ComEd, a subsidiary of Exelon, was unable to get demand charges added into the legislation.

“Most times when there’s energy legislation either in Congress or in the Midwest states, there tends to be a package with different parties getting different asks,” Learner said. “It’s hard to look at it and say, ‘Everyone got something.’ The fact of the matter is everyone didn’t get something. Both Illinois and Michigan have their own histories and war stories about what made it through and what didn’t.”

Ohio

Meanwhile, advocates and other entities have spent the last week calling on Kasich to veto a bill that would make the state’s clean energy standards voluntary for the next two years. Critics say it would effectively continue a freeze on those policies that were adopted in 2014.

Led by state Sen. Bill Seitz (R-Cincinnati) and aided by major utilities and fossil fuel interests, the Ohio legislature has made a clear attempt to roll back clean energy development. Seitz and others have said it’s unnecessary to mandate clean energy development. Seitz once likened it to “Joseph Stalin’s five-year plan,” while another Republican asked recently whether a mandate to eat kale is coming next.

But clean energy supporters and corporate interests have continued to point out the economic development potential of the sector. As Clift said of Michigan’s clean energy standards being successful, Ohio’s “have also succeeded (and will continue if they’re allowed to reinstate) in lowering energy bills for residents and businesses, factories, and farms,” wrote Samantha Williams, staff attorney with the Natural Resources Defense Council’s Midwest Program.

Williams notes that the state has 100,000 clean energy jobs, but that wind and solar manufacturers are already selling fewer products in-state since 2014.

“Both Illinois and Michigan, in different ways, are stepping up to modernize their electricity systems by spurring development of solar energy and wind power,” Learner said. “They are taking important steps in the right direction that are good, common sense and speed the transition to the clean energy sector. Ohio is a different story.”